Questions remain about the sudden resignation of ASIC chairman David Knott earlier this year just days before BRW revealed the tale of his dodgy former business partner Ian Collie and raised questions about just what Knott knew at the time. Well, a Crikey contributor has read the entire brief and produced this exclusive report.
There was a serious consequence to Collie’s 1987 conviction which cannot be reported here; Bob Sercombe MP put it on record in the Federal Parliament on 18 August 2003 (Hansard, p 18444). Collie appealed his conviction.
In their 1988 judgment dismissing Collie’s appeal, the Full Court of the Supreme Court of Victoria summarised the case as follows:
The applicants were convicted of having conspired together and with others to defraud the Commonwealth by promoting and implementing a scheme to divert the sales tax liability of wholesale merchants participating in the scheme to an entity or entities which would not and could not pay the sales tax and to conceal the sales tax liability of these entities. The scheme was operating throughout Australia from late 1979 to early 1982. In the States in which the applicants operated, the sales tax avoided amounted to about $8 million.
[R v Edwards, 1988 VR 481]
The Age ran a feature article “ASIC chief denies he knew of sales tax scandal” on 15 August 2003, in which Knott denied any knowledge of the tax schemes run by Collie while they were in the two-man partnership from 1 October 1981 to 30 June 1983.
In Collie’s 1987 trial Mr Fitzgerald QC, for the Crown, had introduced the matter thus:
The next matter I want to deal with briefly is the purchase of motor vehicles by the accused Collie. The accused Collie was instrumental in acquiring three new motor vehicles – one for his own use, one for the use of his partner and one for the use of his relatives – without any sales tax being paid on them.
[Trancript p 198]
And the transcript of evidence given by Steven John Baker on 17 March 1987 says:
Evidence will also be given about the purchase of another Mercedes Benz motor car, also from Worrell’s Motors in Toorak, in September 1981 for Collie’s partner without paying any sales tax on the purchase. Did he have any discussion with you about that? —I don’t think so. Mr Leaver came to me at one stage, I think to ask if Mr Collie could put another vehicle through.
Did you agree to him putting through another Mercedes through the system? —Yes.
[Transcript p 431]
Then on 31 March, Douglas Langhan Nicholson, Sales Manager of Worrell’s Motors Pty Ltd of Carters Avenue, Toorak gave the following evidence in the Supreme Court:
All right, I want to take you to another transaction involving cars for Mr Collie. Sometime during early September, 1981, did you receive a telephone call at Worrall’s from Mr Collie who at that time was inquiring about the purchase of another vehicle?—Yes, there was a subsequent deal, yes.
And what was Mr Collie inquiring about on that occasion? —I think it was a 280SE, if my memory serves me correctly; we had it in stock.
Did Mr Collie indeed come out some two or three hours after that telephone call to Worrall’s showroom?—Yes, it was the same day, I think.
And was he in company with a man who man who was introduced to you as David Knott? —Yes.
And did you show Mr Collie and Mr Knott a blue Mercedes 280SE which you had in stock? —Yes.
Now, would you have a look, please, at these documents which are to be handed to you: a form of offer in the name of Collie and Services Pty Ltd signed by David Knott and dated the 16th of September 1981; a new vehicle invoice showing Collie and Services Pty Ltd as being the customer, that document being dated the 18th of September, 1981; an application for registration of a motor car completed in the name of Collie and Services Pty Ltd, dated the 18th of September 1981, and a photocopy of a Worrall’s Motors receipt numbered 2603 dated the 18th of September 1981.
I should perhaps formerly ascertain this from you Mr Nicholson: the registered number…of this particular car which we have just dealt with is BEN-110? —Yes.
And you sold that car, that Mercedes Benz 280SE to Collie Services Pty Ltd following your discussions with Mr Collie and Mr Knott at the completion of that documentation; is that so?—Yes.
Do you know who it was who assisted you in the completion of that documentation fro
m Mr Collie’s side; was it he or someone else? —I think it may have been Mr Knott.
[Transcript pp 1235 -1238]
On 1 April 1987, John Anthony Haig, Senior Investigation Officer with the Sales Tax Division of the Australian Tax Office, was examined on the transaction:
Would you now deal with the retail side of the vehicle?—On the 16th September, 1981, David Knott signed in the name of Collie and Services Pty Ltd a form of offer No.2582 being an offer to purchase the vehicle from Worrall’s for a less tax price of $49,676.75. The order form contains references to exempt tax…and also the words “Queensland Sales Tax”…
[Transcript p 1392]
Earlier, Mr Haig had given evidence that the “full tax-free price” was closer to $40,000: $42,691.59 to be precise.
Later that day, Ian Gzell QC gave character evidence for Collie.
On 6 April 1987, Mr Collie had no difficulty recalling Knott’s involvement in the scheme:
I had no hesitation in involving myself personally, my parents and my partner in direct involvement in the scheme…
(Transcript p 1581A)
Three years later, in his case against a QC who had given advice on the scheme, Collie gave the background to Knott’s joining him to form the firm Collie Knott & Co:
We spoke of Mr Knott, Mr Collie. Who is Mr Knott? What was his position at the time? —Well, he was a partner. Until he joined me he was a partner of the then firm of Arthur Robinson and Company and he joined me on 1 October 1981 and then left after the committal proceedings were virtually concluded…
Can you outline to the court the basis of the discussions between yourself and Mr Knott with respect to the consideration to be paid for that partnership?—Well, we discussed what we saw the future to be in terms of income sources which would be funds of moneys earned as solicitors, or as a partnership of solicitors and moneys earned by companies which would be jointly operated in the – particularly real estate development field and he indicated that he would be leaving a large highly-regarded professional practice with virtually guaranteed income and he wanted some compensation, given that he was to go into partnership with me where the prospects in the longer term appeared to be good but he wanted to be covered in the short term and he requested my agreement. I can’t recall the exact figure he started with but he certainly got to $120,000 as a price to be induced, if you like, to come across. That was finally negotiated to $80,000. That was paid in two instalments in, I think, 82 and early in 83.
[Transcript pp 293 and 294, Collie v Forsyth, 24 September 1990]
And Collie gave evidence that the last fifteen months of Collie Knott’s existence was almost entirely expended defending the sales tax fraud matter:
Did the partnership perform up to expectations? — No.
Why was that? —By and large because by 1982, after the raid, or in March 1982 the raid occurred; there was obviously some concern at this point. By May 1982, it became apparent that people in Queensland were suggesting that the Federal Police were going to charge me with conspiracy to defraud the Revenue. That then took place on October 1982 and the balance of the partnership period was almost entirely expended in preparing and actually fighting a defence.
[Transcript, Collie v Forsyth, p 295]
It would seem that by 15 August 2003 Knott could recall little or none of this. In his interview with The Age he attacked the BRW revelations concerning Collie Knott and his involvement in the scheme, saying they involved “…the conduct of a person of which I was unaware.”